Recent Changes in Law Allow for Treble Damages in Korean Trademark Cases

Protection of intellectual property in the United States has long been written into American law since the days of our founding fathers.  Across the globe, however, Asian countries, especially China, have often been criticized for what many consider to be a more lax view on intellectual property rights. 

Calculating Damages in Korean Trademark Infringement Cases

Since the early 2000’s, however, Asian countries have increasingly been strengthening the laws that are designed to protect intellectual property nationally and abroad.  As such, it behooves trademark attorneys and other brand managers to follow any significant changes in Asian intellectual property law as the Asian market brings in millions for big brands every year.  In China, Korean, and Japan, changes to intellectual property rights are made every year.  And often using the U.S. Lanham Act as a guide, South Korean legislators recently made amendments to both their national Trademark Act as well as their Design Protection Act.  Combined, these new changes finally make treble damages available in certain trademark infringement claims, which has long been available under U.S. law.  

In the past, in South Korea, the damages for claims of trademark infringement were calculated based on a combination of factors that include: the profits lost; profits made from the infringement, and expected royalties.  The calculation made off these factors often left much to be desired for the owner of the rights being infringed because damages were often capped out at certain values.  For example, when calculating the first fact, profits lost, the value was limited to the sales capacity of the rights holder.  More plainly speaking, the damages could not be found to exceed the number the rights holder could have sold.  Thus, imagine a scenario where a small business was making toys that were handmade and their trademark was becoming valuable and recognizable in their field.  Then an infringer, which happened to be a bigger business, comes along, and palms off the goodwill of the small business owner’s trademark.  Well then, even if the product and trademark could have gone on to make millions from the mark, but were not quite there, the damages calculated based on the small business’s capacity for profits, taken at that snapshot in time, may not adequately compensate them.  Moreover, with respect to the second factor, it is unfortunately not uncommon for large corporations to routinely provide vague financial data or evidence that does not actually reflect the profits made off the infringement.  This subterfuge has often made the figures calculated on profits made off the infringement incorrect and/or much lower than it should be.

New Laws Allow for Treble Damages in Korean Trademark Cases

With the introduction of treble damages, this all stands to change, however.  These new provisions will give courts the power to multiply the damages to be received by the original rights holder, specifically up to triple the damages in cases of willful infringement.  Changes have also been made to the third factor, royalties.  In the past, courts were also allowed to compensate for the royalties that were “ordinarily expected.”  With the new changes, courts may now award based on a calculation of royalties “reasonably expected.”  In terms of statutory damages, the cap on damages has been raised to $100 million, up from $85,000, and up to $300 million in cases of willful infringement.  Thus, with these new changes in law, many American brands may be able to sue for higher damages in markets where they previously felt that infringement had been rampant without much fear of reprisal.

Key Takeaways for Changes in Law Allowing Treble Damages in Korean Trademark Cases

Increased damages are now available for certain South Korean trademark infringement claims.  These changes to the provisions now allow for:

• royalties to be calculated differently;

• treble damages; and

• increased statutory damages, which brings South Korean intellectual property law closer to its American counterpart.

For more insights on trademark litigation, see our IP Litigation and Industry Focused Legal Solutions pages.

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